6323 (j) Withdrawal of notice in certain circumstances.
(1) In general.
The Secretary may withdraw a notice of a lien filed under
this section and this chapter shall be applied as if the withdrawn notice had
not been filed, if the Secretary determines that—
(A) the filing of such notice was premature or otherwise not
in accordance with administrative procedures of the Secretary,
(B) the taxpayer has
entered into an agreement under section 6159 to satisfy the tax liability for
which the lien was imposed by means of installment payments, unless such
agreement provides otherwise,
(C) the withdrawal of
such notice will facilitate the collection of the tax liability, or
(D) with the consent
of the taxpayer or the National Taxpayer Advocate, the withdrawal of such
notice would be in the best interests of the taxpayer (as determined by the
National Taxpayer Advocate) and the United States.
Any such withdrawal shall be made by filing notice at the
same office as the withdrawn notice. A copy of such notice of withdrawal shall
be provided to the taxpayer.
(2) Notice to credit
agencies, etc.
Upon written request by the taxpayer with respect to whom a
notice of a lien was withdrawn under paragraph (1), the Secretary shall
promptly make reasonable efforts to notify credit reporting agencies, and any
financial institution or creditor whose name and address is specified in such
request, of the withdrawal of such notice. Any such request shall be in such
form as the Secretary may prescribe.
Reg §301.6323(j)-1. Withdrawal of notice of federal tax lien
in certain circumstances.
Effective: June 22,
2001.
(a) In general. The Commissioner or his delegate
(Commissioner) may withdraw a notice of federal tax lien filed under this
section, if the Commissioner determines that any of the conditions in paragraph
(b) of this section exist. A notice of federal tax lien is withdrawn by the
filing by the Commissioner of a notice of withdrawal in the office in which the
notice of federal tax lien is filed. If a notice of withdrawal is filed,
chapter 64 of subtitle F, relating to collection, will be applied as if the
withdrawn notice had never been filed. A copy of the notice of withdrawal will
be provided to the taxpayer. Upon written request by a taxpayer with respect to
whom a notice of federal tax lien has been or will be withdrawn, the
Commissioner will promptly make reasonable efforts to notify any credit
reporting agency and any financial institution or creditor identified by the
taxpayer of the withdrawal of such notice. The withdrawal of a notice of
federal tax lien will not affect the underlying federal tax lien.
(b) Conditions authorizing withdrawal. The Commissioner may
authorize the withdrawal of a notice of federal tax lien upon determining that
one of the following conditions exists:
(1) Premature or not in accordance with administrative
procedures. The filing of the notice of federal tax lien was premature or
otherwise not in accordance with the administrative procedures of the
Secretary.
(2) Installment agreement. The taxpayer has entered into an
agreement under section 6159 to satisfy the liability for which the lien was
imposed by means of installment payments. Entry into an installment agreement
may not, however, be the basis for withdrawal of a notice of lien if the
installment agreement specifically provides that a notice of federal tax lien
will not be withdrawn.
(3) Facilitate collection. The withdrawal of the notice of
federal tax lien will facilitate the collection of the tax liability for which
the lien was imposed.
(4) Best interests of the United States and the taxpayer.
(i) In general. The taxpayer or the National Taxpayer
Advocate (or his delegate) has consented to the withdrawal of the notice of
federal tax lien, and withdrawal of the notice would be in the best interest of
the taxpayer, as determined by the taxpayer or the National Taxpayer Advocate
(or his delegate), and in the best interest of the United States, as determined
by the Commissioner.
(ii) Best interest of the taxpayer. When a taxpayer requests
the withdrawal of notice of federal tax lien based on the best interests of the
United States and the taxpayer, the National Taxpayer Advocate (or his
delegate) generally will determine whether the withdrawal of the notice of
federal tax lien is in the best interest of the taxpayer. If, however, a
taxpayer requests the Commissioner to withdraw a notice and has not
specifically requested the National Taxpayer Advocate (or his delegate) to
determine the taxpayer's best interest, a finding by the Commissioner that the
withdrawal of notice is in the best interest of the taxpayer will be sufficient
to support withdrawal. If the Commissioner decides independently of a request
by the taxpayer to withdraw a notice of federal tax lien, the taxpayer or the National
Taxpayer Advocate (or his delegate) must consent to the withdrawal.
(5) Examples. The following examples illustrate the
provisions of this paragraph (b):
Example (1). A owes $1,000 in Federal income taxes. The IRS
files a notice of federal tax lien to secure A's tax liability. However, the
IRS failed to follow procedure provided by the Internal Revenue Manual (but not
required by statute) with regard to managerial approval prior to the filing of
a notice of federal tax lien. The Commissioner may withdraw the notice of
federal tax lien because the filing of the notice was not in accordance with
the Secretary's administrative procedures.
Example (2). A owes $1,000 in federal income taxes. A enters
into an agreement to pay the outstanding federal income tax liability in
installments. The agreement provides that a notice of federal tax lien may be
filed if the taxpayer defaults. A timely pays the installments each month and
has not defaulted in any way. Eleven months after entering into the installment
agreement, the Internal Revenue Service files a notice of federal tax lien.
Noting that there has been no default, the taxpayer asks the Internal Revenue
Service to withdraw the notice of federal tax lien. In this situation, the
Commissioner may withdraw the notice of federal tax lien because the taxpayer
has entered into an installment agreement.
Example (3). A is an employee of X Corporation. A notice of
federal tax lien has been filed to secure an outstanding tax liability against
A. A, who has no assets and no other secured creditors, has agreed to pay the
balance of tax due through payroll deductions at a rate higher than the
Internal Revenue Service could obtain through a wage levy in order to get the
notice of federal tax lien withdrawn. X Corporation has agreed to allow A to
enter into a payroll deduction agreement. In this situation, the Commissioner
may withdraw the notice of federal tax lien to facilitate collection.
Example (4). A is owner of a farm machinery dealership
against whom a notice of federal tax lien has been filed to secure an
outstanding tax liability. A currently is paying the tax liability by an
installment agreement. X Corporation has agreed to provide A with 100 tractors
to increase A's inventory if the notice of federal tax lien is withdrawn. A
asks the Internal Revenue Service to withdraw the notice of federal tax lien.
The Commissioner determines that the larger inventory would enable A to
generate additional tractor sales. Increased sales would enable A to increase
the amount of installment payments and, consequently, reduce the amount of time
needed to satisfy the liability. A, who has no other assets or secured
creditors, has agreed to modify the installment agreement. The Commissioner may
withdraw the notice of federal tax lien because the withdrawal is in the best
interest of the taxpayer and the United States.
(c) Determinations by the Commissioner. The Commissioner
must determine whether any of the conditions authorizing the withdrawal of a
notice of federal tax lien exist if a taxpayer submits a request for withdrawal
in accordance with paragraph (d) of this section. The Commissioner may also
make this determination independent of a request from the taxpayer based on
information received from a source other than the taxpayer. If the Commissioner
determines that conditions authorizing the withdrawal are not present, the
Commissioner may not authorize the withdrawal. If the Commissioner determines
conditions for withdrawal are present, the Commissioner may (but is not required
to) authorize the withdrawal.
(d) Procedures for request for withdrawal.
(1) Manner. A request for the withdrawal of a notice of
federal tax lien must be made in writing in accordance with procedures
prescribed by the Commissioner.
(2) Form. The written request will include the following
information and documents—
(i) Name, current address, and taxpayer identification
number of the person requesting the withdrawal of notice of federal tax lien;
(ii) A copy of the notice of federal tax lien affecting the
taxpayer's property, if available;
(iii) The grounds upon which the withdrawal of notice of
federal tax lien is being requested;
(iv) A list of the names and addresses of any credit
reporting agency and any financial institution or creditor that the taxpayer
wishes the Commissioner to notify of the withdrawal of notice of federal tax
lien; and
(v) A request to disclose the withdrawal of notice of
federal tax lien to the persons listed in paragraph (d)(2)(iv) of this section.
(e) Supplemental list of credit agencies, financial
institutions, and creditors.
(1) In general. If the Commissioner grants a withdrawal of
notice of federal tax lien, the taxpayer may supplement the list in paragraph
(d)(2)(iv) of this section. If no list was provided in the request to withdraw
the notice of federal tax lien, the list in paragraph (d)(2)(iv) of this
section and the request for notification in paragraph (d)(2)(v) of this section
may be submitted after the notice is withdrawn.
(2) Manner. A request to supplement the list of any credit
agencies and any financial institutions or creditors that the taxpayer wishes
the Commissioner to notify of the withdrawal of notice of federal tax lien must
be made in writing in accordance with procedures prescribed by the Commissioner.
(3) Form. The request must include the following information
and documents—
(i) Name, current address, and taxpayer identification
number of the taxpayer requesting the notification of any credit agency or any
financial institution or creditor of the withdrawal of notice of federal tax
lien;
(ii) A copy of the notice of withdrawal, if available;
(iii) A supplemental list, identified as such, of the names
and addresses of any credit reporting agency and any financial institution or
creditor that the taxpayer wishes the Commissioner to notify of the withdrawal
of notice of federal tax lien; and
(iv) A request to disclose the withdrawal of notice of
federal tax lien to the persons listed in paragraph (e)(3)(iii) of this
section.
(f) Effective date. This section applies on or after June
22, 2001, with respect to a withdrawal of any notice of federal tax lien.
T.D. 8951, 6/21/2001.
IRSIG SBSE-05-0611-037
Withdrawal of Notice of Federal Tax Lien after Release
FULL TEXT:
June 10, 2011
Control No.: SB/SE-05-0611-037
Expiration Date: June 10, 2012
Impacted: IRM 5.12.3
MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS
DIRECTOR, ADVISORY, INSOLVENCY, AND QUALITY DIRECTOR, FILING AND PAYMENT
COMPLIANCE (SB) DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS
COMPLIANCE SERVICES (CINCINNATI)
FROM:
Scott D. Reisher /s/ Scott D. Reisher
Director, Collection Policy
SUBJECT:
Withdrawal of Notice of Federal Tax Lien after Release
The purpose of this memorandum is to issue Interim Guidance
(IG) for processing requests for withdrawal of notices of federal tax lien
after the lien has been released. Internal Revenue Manual (IRM) 5.12.3 ,
Certificates Relating to Liens, will be revised to include the information in
this memorandum. Please ensure that this information is distributed to all
affected employees in your organization.
Internal Revenue Code
(IRC) section 6323(j)(1) provides that the Internal Revenue Service (IRS) may
(but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is
determined that certain criteria are met, including situations when the filing
was premature or not in accordance with administrative procedures ( section
6323(j)(1)(A)) or the withdrawal would be in the best interests of the taxpayer
and the United States ( section 6323(j)(1)(D)). Effective immediately, we are
establishing a policy to allow a withdrawal under paragraphs (A) and (D)
of section 6323(j)(1) when the taxpayer
requests a withdrawal after the lien has been released.
This Interim Guidance memorandum sets forth the procedures
for these withdrawals based on the current delegation orders. Additional
guidance will be provided as revisions to the delegation orders are
implemented.
The guidance contained herein regarding conditions for withdrawal
is specific to situations where the lien has been released. Conditions for
other types of withdrawals remain unchanged. Taxpayers may apply for a
withdrawal under any provision of IRC
6323(j)(1), and, except as otherwise described in this memorandum, all
procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for
withdrawal remain in effect.
Post-release Lien Withdrawals Under IRC 6323(j)(1)(A)
A request for withdrawal of a NFTL under IRC 6323(j)(1)(A) should generally be
granted if the following conditions apply:
The taxpayer requests the withdrawal in writing;Note: Form
12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the
preferred format for the taxpayer's request; however, any written request that
provides sufficient information may by used for processing (seeIRM 5.12.3.32 );
The taxpayer demonstrates that the original NFTL filing was
improper or otherwise not in accordance with IRS procedures.
A withdrawal under this provision may be issued whether a
certificate of release was issued or the NFTL self-released.
Post-release Lien Withdrawals Under IRC 6323(j)(1)(D)
A request for withdrawal of a NFTL under IRC 6323(j)(1)(D) where the underlying lien
has been released will generally be granted if the following conditions apply:
The taxpayer requests the withdrawal in writing;Note: Form
12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the
preferred format for the taxpayer's request; however, any written request that
provides sufficient information may by used for processing (seeIRM 5.12.3.32 ).
The taxpayer fully satisfied the liabilities on the NFTL;
A certificate of release was issued; and
The taxpayer is in compliance with filing requirements.
For purposes of this memorandum, “fully satisfied” includes:
Tax liability was fully resolved by payment or credit
offset;
Most circumstances where the tax assessment was abated
because the taxpayer is no longer liable for the tax (e.g., amended return
filed, reconsideration of additional assessment, innocent spouse determination,
or judicial ruling);
Abatement of penalty and/or interest due to reasonable cause
resulted in zero balance; or
The taxpayer completed terms of an offer in compromise,
including any related collateral agreements.
“Fully satisfied” generally does not include:
Expiration of the statutory period for collection;
Discharge of taxes in bankruptcy; or
NFTLs that were improvidently or erroneously released and
are subject to revocation.
For purposes of this memorandum, “in compliance with filing
requirements” includes:
All required Individual Master File (IMF) and Business
Master File (BMF) returns, including information returns, for the prior three
years have been filed; and
Current Estimated Tax Payments and Federal Tax Deposits
(FTDs) have been paid.
If the taxpayer has an unfiled return during any of the past
three years, or appears to be delinquent with FTDs or Estimated Tax Payments,
further investigation may be necessary as determined on a case-by-case basis.
The taxpayer will be considered to be in compliance if the return was, or can
be, closed for one of the following reasons:
Not liable for the tax period;
Income below the filing requirement;
Little or no tax due or due a refund; or
No longer liable for filing.
The taxpayer may be requested to supply additional
information, as necessary, to complete this determination.
Generally, withdrawals will not be granted for self-released
liens under IRC section 6323(j)(1)(D)
unless extenuating circumstances are present. The determination to grant such
request will be made on a case-by-case basis and with managerial approval.
Examples of possible extenuating circumstances are as follows:
Example: A taxpayer is attempting to secure a license
required for their vocation (e.g., realtor, insurance sales), but the record of
the self-released NFTL is impeding their ability to obtain the license. A
review of the account shows the tax liabilities listed on the NFTL were
reported as uncollectible due to economic hardship of the taxpayer for most of
the ten-year collection period, and the taxpayer had no assets of value. The
statutory period for collection on the liabilities has expired. The taxpayer is
in compliance with current and the prior three years' tax obligations.
Withdrawal of the self-released lien may be granted.
Example: The taxpayer has tentatively been offered an
employment position if the self-released lien is withdrawn. The lien
self-released due to statute expiration, and the taxpayer is in compliance with
all current filing requirements. There is no indication the taxpayer had the
ability to make payments, had any assets, or paid unsecured creditors instead
of the IRS. Withdrawal of the self-released lien may be granted.
Example: The taxpayer owes tax liabilities that were not
included on the self-released lien and are not on any open NFTL. The taxpayer
is now in a position to restructure a loan to pay the open liabilities but the
self-released lien is hindering that process. The taxpayer is in compliance
with current filing requirements. A withdrawal of the self-released lien may be
granted.
To consider self-released liens for withdrawal, the taxpayer
must be in compliance with filing requirements, as stated above, and the
statutory period(s) for collection for the liability(ies) on the NFTL must have
expired. Liens that self -released in error and are subject to revocation do
not qualify for withdrawal under these procedures. NFTLs that are comprised of
a mix of fully satisfied and expired liabilities should be evaluated on a
case-by-case basis. NFTLs that contain liabilities that have not been satisfied
or expired are not subject to withdrawal under these procedures; however,
taxpayers may receive consideration of the withdrawal by following established procedures
for requesting a withdrawal of a filed NFTL.
Procedures
Requests for withdrawal of a released NFTL will be processed
as follows:
1. Requests will be reviewed by the Collection field
employee assigned other balance due modules of the taxpayer. If the taxpayer
owes no other modules or the case is not assigned, the request will be
forwarded to Advisory for review. Note: The current residence of the taxpayer
determines which Advisory office the request should be referred. (See
Publication 4235) This supersedes guidance found in Interim Guidance
SBSE-05-0411-036.
2. The reviewing employee will control the receipt of the
request and document any actions relative to the review on the control system
applicable to the employee's function (e.g., Integrated Collection System
(ICS)).
3. The reviewing employee will ensure that the conditions
for withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue a
letter to the taxpayer denying the request and informing the taxpayer of their
appeal rights under the Collection Appeal Program (CAP).
b. If conditions for withdrawal are met, the reviewing
employee will:
prepare a memorandum outlining the case facts and
recommending the withdrawal;
secure his/her manager's approval; and
forward the memorandum, withdrawal request, and other
pertinent documents to Advisory for approval.
4. Upon receipt, Advisory will open a Non-Field Other
Investigation (NFOI) control on ICS, if not already done, and review the
withdrawal package. The extent of the review will depend on the function
submitting the package.
a. If the package is received from the Collection Field
function and was approved by a Group Manager, Advisory only needs to conduct a
cursory review.
b. If the package is received from any other function,
Advisory will complete a full review of the package and application and make
the withdrawal determination.
Note: Requests for withdrawal received from Appeals as the
result of a timely Collection Due Process, Equivalent Hearing, or a Collection
Appeal Program case will be processed in accordance with IRM 5.1.9 . Advisory
only needs to confirm the accuracy of the Form 13794, Request for Release or
Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory management,
Advisory will:
a. Prepare and forward Form 13794 to Centralized Lien
Processing (CLP) or input the withdrawal into the Automated Lien System (ALS);
and
b. Prepare and forward the Letter 3044, Withdrawal Cover
Letter, to CLP. Note: Requests and documents forwarded to CLP should be by
secure email.
6. CLP will print the Form 10916, Withdrawal of Filed Notice
of Federal Tax Lien, from ALS and then:
a. Send Part 1 to the applicable recording office with the
filing fee; and
b. Associate Part 2 with the corresponding Letter 3044 and
mail the withdrawal to the taxpayer.
7. Advisory will close its NFOI control on ICS after
transmitting the documents to CLP. Actions taken by CLP relative to the
withdrawal can be viewed on ALS.
Since this withdrawal occurs after the original tax
liability was satisfied, no adjustments will be made to the taxpayer's account
to abate the Transaction Code (TC) 360 lien fees previously assessed. Also, no
additional lien fee will be charged to the taxpayer's account for the cost of
the withdrawal filing.
In addition to the above:
The procedures for distributing copies of the approved
withdrawal document will be revised to be consistent with this memorandum.
Specifically, Advisory will forward Form 13794 to CLP or input the withdrawal
to ALS directly, and CLP will issue a copy of the withdrawal to the taxpayer
with the Withdrawal Cover Letter provided by Advisory.
Letter 4026 will be used as the cover letter for all regular
withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all
procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for
withdrawal remain in effect.
If you have any questions, please contact me, or a member of
your staff may contact Marc Aronin, Program Manager or Kyle Romick, Senior
Program Analyst.
cc: Director, Appeals
www.irs.gov
IRSIG SBSE-05-0112-008
Revision to Interim Guidance for Withdrawal of Notice of
Federal Tax Lien after Release
FULL TEXT:
January 4, 2012
Control No.: SBSE-05-0112-008
Expiration Date: January 4, 2013
Impacted: IRM 5.12.3
MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS
DIRECTOR, ADVISORY AND INSOLVENCY DIRECTOR, FILING AND PAYMENT COMPLIANCE (SB)
DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS COMPLIANCE
SERVICES (CINCINNATI)
FROM:
Scott D. Reisher /s/ Scott D. Reisher
Director, Collection Policy
SUBJECT:
Revision to Interim Guidance for Withdrawal of Notice of
Federal Tax Lien after Release
The purpose of this memorandum is to revise the Interim
Guidance (IG), previously issued with control number SBSE-05-0611-037, for
processing requests for withdrawal of notices of federal tax lien after the
lien has been released. This memorandum clarifies satisfaction requirements as
they relate to Offers in Compromise, expands guidance relative to partial
withdrawals, and updates procedures based on recent programming and form
changes. Internal Revenue Manual (IRM) 5.12.3 , Certificates Relating to Liens,
will be revised to include the information in this memorandum. Please ensure
that this information is distributed to all affected employees in your
organization.
Internal Revenue Code
(IRC) section 6323(j)(1) provides that the Internal Revenue Service (IRS) may
(but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is
determined that certain criteria are met, including situations when the filing
was premature or not in accordance with administrative procedures ( section
6323(j)(1)(A)) or the withdrawal would be in the best interests of the taxpayer
and the United States ( section 6323(j)(1)(D)). Effective immediately, we are
establishing a policy to allow a withdrawal under paragraphs (A) and (D)
of section 6323(j)(1) when the taxpayer
requests a withdrawal after the lien has been released.
This Interim Guidance memorandum sets forth the procedures
for these withdrawals based on the current delegation orders. Additional
guidance will be provided as revisions to the delegation orders are
implemented.
The guidance contained herein regarding conditions for
withdrawal is specific to situations where the lien has been released.
Conditions for other types of withdrawals remain unchanged. Taxpayers may apply
for a withdrawal under any provision of
IRC 6323(j)(1), and, except as otherwise described in this memorandum,
all procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests
for withdrawal remain in effect.
Post-release Lien Withdrawals Under IRC 6323(j)(1)(A)
A request for withdrawal of a NFTL under IRC 6323(j)(1)(A) should generally be granted
if the following conditions apply:
The taxpayer requests the withdrawal in writing; Note: Form
12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the
preferred format for the taxpayer's request; however, any written request that
provides sufficient information may by used for processing (see IRM 5.12.3.32
); and
The taxpayer demonstrates that the original NFTL filing was
improper or otherwise not in accordance with IRS procedures.
A withdrawal under this provision may be issued whether a
certificate of release was issued or the NFTL self-released.
Post-release Lien Withdrawals Under IRC 6323(j)(1)(D)
A request for withdrawal of a NFTL under IRC 6323(j)(1)(D) where the underlying lien
has been released will generally be granted if the following conditions apply:
The taxpayer requests the withdrawal in writing; Note: Form
12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the
preferred format for the taxpayer's request; however, any written request that
provides sufficient information may by used for processing (see IRM 5.12.3.32
).
The taxpayer fully satisfied the liabilities on the NFTL;
A certificate of release was issued; and
The taxpayer is in compliance with filing requirements.
For purposes of this memorandum, “fully satisfied” includes:
Tax liability was fully resolved by payment or credit
offset;
Most circumstances where the tax assessment was abated
because the taxpayer is no longer liable for the tax (e.g., amended return
filed, reconsideration of additional assessment, innocent spouse determination,
or judicial ruling);
Abatement of penalty and/or interest due to reasonable cause
resulted in zero balance; or
The taxpayer completed terms of an offer in compromise,
including any related collateral agreements. Note: The completion of the
five-year compliance period after acceptance of the offer is not a condition to
determine “fully satisfied.”
“Fully satisfied” generally does not include:
Expiration of the statutory period for collection;
Discharge of taxes in bankruptcy; or
NFTLs that were improvidently or erroneously released and
are subject to revocation.
For purposes of this memorandum, “in compliance with filing
requirements” includes:
All required Individual Master File (IMF) and Business
Master File (BMF) returns, including information returns, for the prior three
years have been filed; and
Current Estimated Tax Payments and Federal Tax Deposits
(FTDs) have been paid.
If the taxpayer has an unfiled return during any of the past
three years, or appears to be delinquent with FTDs or Estimated Tax Payments,
further investigation may be necessary as determined on a case-by-case basis.
The taxpayer will be considered to be in compliance if the return was, or can
be, closed for one of the following reasons:
Not liable for the tax period;
Income below the filing requirement;
Little or no tax due or due a refund; or
No longer liable for filing.
The taxpayer may be requested to supply additional
information, as necessary, to complete this determination.
Generally, withdrawals will not be granted for self-released
liens under IRC section 6323(j)(1)(D)
unless extenuating circumstances are present. The determination to grant such
request will be made on a case-by-case basis and with managerial approval.
Examples of possible extenuating circumstances are as follows:
Example: A taxpayer is attempting to secure a license
required for their vocation (e.g., realtor, insurance sales), but the record of
the self-released NFTL is impeding their ability to obtain the license. A
review of the account shows the tax liabilities listed on the NFTL were
reported as uncollectible due to economic hardship of the taxpayer for most of
the ten-year collection period, and the taxpayer had no assets of value. The
statutory period for collection on the liabilities has expired. The taxpayer is
in compliance with current and the prior three years' tax obligations.
Withdrawal of the self-released lien may be granted.
Example: The taxpayer has tentatively been offered an
employment position if the self-released lien is withdrawn. The lien
self-released due to statute expiration, and the taxpayer is in compliance with
all current filing requirements. There is no indication the taxpayer had the
ability to make payments, had any assets, or paid unsecured creditors instead
of the IRS. Withdrawal of the self-released lien may be granted.
Example: The taxpayer owes tax liabilities that were not
included on the self-released lien and are not on any open NFTL. The taxpayer
is now in a position to restructure a loan to pay the open liabilities but the
self-released lien is hindering that process. The taxpayer is in compliance
with current filing requirements. A withdrawal of the self-released lien may be
granted.
To consider self-released liens for withdrawal, the taxpayer
must be in compliance with filing requirements, as stated above, and the
statutory period(s) for collection for the liability(ies) on the NFTL must have
expired. Liens that self -released in error and are subject to revocation do
not qualify for withdrawal under these procedures. NFTLs that are comprised of
a mix of fully satisfied and expired liabilities should be evaluated on a
case-by-case basis. NFTLs that contain liabilities that have not been satisfied
or expired are not subject to withdrawal under these procedures; however,
taxpayers may receive consideration of the withdrawal by following established
procedures for requesting a withdrawal of a filed NFTL.
In situations where more than one person is named on the
NFTL (e.g., joint liability) and only one person applies for the withdrawal,
the application for withdrawal should be treated as a request for a full
withdrawal. However, if the applying taxpayer meets the requirements stipulated
above but the other, non-applying taxpayer listed on the NFTL does not, a
partial withdrawal after release may be issued.
Note: The Automated Lien System (ALS) is not programmed to
generate partial withdrawals after release. These partial withdrawals, and
corresponding cover letter, must be manually prepared and issued. Follow normal
guidance for filing manual lien documents.
Procedures
Requests for withdrawal of a released NFTL will be processed
as follows:
1. Requests will be reviewed by the Collection field
employee assigned other balance due modules of the taxpayer. If the taxpayer
owes no other modules or the case is not assigned, the request will be
forwarded to Advisory for review. Note: The current residence of the taxpayer
determines which Advisory office the request should be referred. (See
Publication 4235) This supersedes guidance found in Interim Guidance
SBSE-05-0411-036.
2. The reviewing employee will control the receipt of the
request and document any actions relative to the review on the control system
applicable to the employee's function (e.g., Integrated Collection System
(ICS)).
3. The reviewing employee will ensure that the conditions
for withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue
Letter 4711, Withdrawal Decision Letter, to the taxpayer denying the request
and informing the taxpayer of their appeal rights under the Collection Appeal
Program (CAP).
b. If conditions for withdrawal are met, the reviewing
employee will:
prepare a memorandum outlining the case facts and
recommending the withdrawal;
secure his/her manager's approval; and
forward the memorandum, withdrawal request, and other
pertinent documents to Advisory for approval.
4. Upon receipt, Advisory will open a Non-Field Other
Investigation (NFOI) control on ICS, if not already done, and review the
withdrawal package. The extent of the review will depend on the function
submitting the package.
a. If the package is received from the Collection Field
function and was approved by a Group Manager, Advisory only needs to conduct a
cursory review.
b. If the package is received from any other function,
Advisory will complete a full review of the package and application and make
the withdrawal determination. Note: Requests for withdrawal received from
Appeals as the result of a timely Collection Due Process, Equivalent Hearing,
or a Collection Appeal Program case will be processed in accordance with IRM
5.1.9 . Advisory only needs to confirm the accuracy of the Form 13794-W, Request
for Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory
management, Advisory will prepare and forward Form 13794-W to Centralized Lien
Processing (CLP) or input the withdrawal into the Automated Lien System (ALS).
Note: Requests and documents forwarded to CLP should be by secure email.
6. Form 10916, Withdrawal of Filed Notice of Federal Tax
Lien, will be generated from ALS and distributed.
a. CLP will print Part 1of the form and send it to the
applicable recording office with the filing fee.
b. Consolidated Production Services (CPS) will print Part 2
of the form and mail it to the taxpayer with the corresponding Letter 3044,
Withdrawal After Release Cover Letter, also generated from ALS.
7. Advisory will close its NFOI control on ICS after
transmitting the Form 13794-W to CLP. Actions taken by CLP relative to the
withdrawal can be viewed on ALS. As part of their closing actions, Advisory may
send Letter 4711 to the taxpayer advising of the withdrawal determination.
Since this withdrawal occurs after the original tax
liability was satisfied, no adjustments will be made to the taxpayer's account
to abate the Transaction Code (TC) 360 lien fees previously assessed. Also, no
additional lien fee will be charged to the taxpayer's account for the cost of
the withdrawal filing.
Pursuant to IRC
6323(j)(2), taxpayers may request additional copies of the withdrawal form to
be sent to specified third parties. These requests will be worked by the
employee assigned the case or Advisory. Copies of the Form 10916 may be
obtained through CLP. Copies of the withdrawal cover letter are not available
through CLP and are not needed. A general cover letter prepared by the employee
may be used to send the copy of the withdrawal form to the specified third
party.
In addition to the above:
The procedures for distributing copies of all approved
withdrawal documents will be revised to be consistent with this memorandum.
Specifically, Advisory will forward Form 13794-W to CLP or input the withdrawal
to ALS directly. CPS will issue a copy of the withdrawal to the taxpayer with
the Withdrawal Cover Letter systemically generated from ALS.
Letter 4026 will be used as the cover letter for all regular
withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all
procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for
withdrawal remain in effect.
If you have any questions, please contact me, or a member of
your staff may contact Marc Aronin, Program Manager or Kyle Romick, Senior
Program Analyst.
cc: Director, Appeals
www.irs.gov
IRSIG SBSE-05-0411-036
Withdrawal of Notice of Federal Tax Lien in Direct Debit
Installment Agreement Situations
FULL TEXT:
April 7, 2011
Control No.: SBSE-05-0411-036
Expiration Date: 04/7/2012
IRM Impacted: 5.12.3
MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS
DIRECTOR, ADVISORY, INSOLVENCY, AND QUALITY DIRECTOR, FILING AND PAYMENT
COMPLIANCE (SB) DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS
COMPLIANCE SERVICES (CINCINNATI)
FROM:
Scott D. Reisher /s/ Scott D. Reisher
Acting Director, Collection Policy
SUBJECT:
Withdrawal of Notice of Federal Tax Lien in Direct Debit
Installment Agreement Situations
The purpose of this memorandum is to issue Interim Guidance
for processing requests for withdrawal of notices of federal tax lien when the
taxpayers are in an established Direct Debit Installment Agreement (DDIA).
Internal Revenue Manual (IRM) 5.12.3 , Certificates Relating to Liens, will be
revised to include the information in this memorandum. Please ensure that this
information is distributed to all affected employees in your organization.
Internal Revenue Code (IRC)
section 6323(j) provides that the Internal Revenue Service (IRS) may
(but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is
determined that certain criteria are met, including if the taxpayer has entered
into an installment agreement ( section 6323(j)(1)(B)). Effective immediately,
we are expanding current policy to allow a withdrawal under section 6323(j)(1)(B) when the taxpayer has
entered into a DDIA (subject to the conditions specified below).
This Interim Guidance memorandum sets forth the procedures
for this type of expanded withdrawal based on the current delegation orders.
Additional guidance will be provided as revisions to the delegation orders are
implemented.
The guidance contained herein regarding conditions for
withdrawal is specific to DDIA situations. Conditions for other types of
withdrawals remain unchanged.
Taxpayers may apply for a withdrawal under any provision
of IRC 6323(j), including 6323(j)(1)(B), and, except as otherwise
described in this memorandum, all procedures in IRM 5.12.3 and5.12.6 for
evaluating and processing requests for withdrawal remain in effect.
Procedures
The following types of taxpayers qualify for withdrawal of
the NFTL under this DDIA provision:
Individual Master File (IMF);
Business Master File (BMF) (income tax only); or
BMF out of business (any type of tax).
Generally, a request for withdrawal under this provision
will be approved if all of the following conditions are met:
The aggregate unpaid balance of assessments is $25,000 or
less; Note: The unpaid balance of assessments includes tax, assessed penalty
and interest, and all other assessments on the tax modules. It does not include
accrued (i.e., unassessed) penalty and interest.
If pre-assessed taxes are included, the pre-assessed
liability (including tax, penalty, and interest up to the date of expected
assessment) plus unpaid balance of other assessments must be $25,000 or less;
The total tax liability will be fully paid in 60 months, or
the agreement will be fully paid prior to the Collection Statute Expiration Date
(CSED), whichever comes first (Use Integrated Data Retrieval System (IDRS)
Command Code (CC)ICOMP);
The taxpayer requests the withdrawal in writing; Note: Form
12277, Application for Withdrawal of Filed Notice of Federal Tax Lien, is the
preferred format for the taxpayer's request; however, any written request that
provides sufficient information may by used for processing (see IRM 5.12.3.32
).
The taxpayer is in compliance with other filing and payment
requirements;
The taxpayer is under a DDIA;7At least three consecutive
electronic payments (generally received on a monthly basis) have been processed
under the DDIA and there have been no defaults in payment under this, or any
previous, DDIA; and7The taxpayer did not previously have a withdrawal of lien for
any of the modules included in the DDIA (e.g., TC 583 dc 03 on module). This
excludes previous withdrawals for improper filing under IRC 6323(j)(1)(A) (e.g., TC 583 dc 02 on
module).
Requests for withdrawal from taxpayers in a DDIA will be
processed as follows:
1. Requests will be reviewed by the Collection field
employee assigned the taxpayer's case or, if the case is not assigned,
forwarded to Advisory for review.Note: The filing location of the NFTL
determines to which Advisory office the request should be referred. (See
Publication 4235)
2. The reviewing employee will control the receipt of the
request and document any actions relative to the review on the control system
applicable to the employee's function (e.g., Integrated Collection System
(ICS)).
3. The reviewing employee will ensure that the conditions
for DDIA withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue a
letter to the taxpayer denying the request and informing the taxpayer of their
appeal rights under the Collection Appeal Program (CAP).
b. If conditions for withdrawal are met, the reviewing
employee will:
prepare a memorandum outlining the case facts and
recommending the withdrawal;
secure his/her manager's approval on the memorandum; and
forward the memorandum, withdrawal request, and other
pertinent documents to Advisory for approval.
4. Upon receipt, Advisory will open a Non-field Other
Investigation (NFOI) control on ICS, if not already done, and review the
withdrawal package. The extent of the review will depend on the function
submitting the package.
a. If the package is received from the Collection Field
function and was approved by a Group Manager, Advisory only needs to conduct a
cursory review.
b. If the package is received from any other function,
Advisory will complete a full review of the package and application to make the
withdrawal determination.Note: Requests for withdrawal received from Appeals as
the result of a timely Collection Due Process, Equivalent Hearing, or a
Collection Appeal Program case will be processed in accordance with IRM 5.1.9 .
Advisory only needs to confirm the accuracy of the Form 13794, Request for
Release or Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory management,
Advisory will:
a. Prepare and forward Form 13794 to Centralized Lien
Processing (CLP) or input the withdrawal directly into the Automated Lien
System (ALS); and
b. Prepare and forward Letter 4026, Withdrawal Cover Letter,
to CLP. Note: The published Letter 4026 is being revised with the wording as
shown on the attachment; however, the current Letter 4026 is sufficient and may
continue to be used until the revised letter is published.Note: Requests and
documents forwarded to CLP should be by secure email.
6. CLP will print the Form 10916, Withdrawal of Filed Notice
of Federal Tax Lien, from ALS and then:
a. Send Part 1 to the applicable recording office with the
filing fee; and
b. Associate Part 2 with the corresponding Letter 4026 and
mail the withdrawal to the taxpayer.
7. Advisory will close its NFOI control on ICS after
transmitting the documents to CLP. Actions taken by CLP relative to the
withdrawal can be viewed on ALS. Taxpayers making payments under any other type
of installment agreement are not eligible for consideration for withdrawal
under the conditions specified above unless they convert to a DDIA and
otherwise meet the conditions. Taxpayers are not precluded, however, from
requesting a withdrawal under any provision of the IRC 6323(j).
If a taxpayer defaults on making payment under the DDIA
after the NFTL is withdrawn, a new notice of lien may be filed, if appropriate.
Note: The above revisions apply only to a taxpayer's
eligibility for withdrawal consideration. They do not impact the criteria for a
taxpayer's eligibility for a DDIA.
In addition to the above:
The method of distributing copies of other approved
withdrawal documents will be revised to be consistent with this memorandum.
Specifically, Advisory will forward Form 13794 to CLP or input the withdrawal
to ALS directly, and CLP will issue a copy of the withdrawal to the taxpayer
with the Withdrawal Cover Letter provided by Advisory.
Letter 4026 will be used as the cover letter for all regular
withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all
procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for
withdrawal remain in effect.
If you have any questions, please contact me, or a member of
your staff may contact Marc Aronin, Program Manager or Kyle Romick, Senior
Program Analyst.
Attachment: Letter 4026, Withdrawal Cover Letter
cc: Chief, Appeals
Internal Revenue Service Department of the Treasury
Date:
IRS Employee to Contact:
Employee Identification Number:
Contact Telephone Number:
Previously, the Internal Revenue Service filed a Notice of
Federal Tax Lien against your property. This notice is being withdrawn under
the provisions of Internal Revenue Code
section 6323(j). Enclosed is a copy of the Form 10916(c), Withdrawal of
Filed Notice of Federal Tax Lien, that we have mailed to the local recording
office for filing.
The withdrawal of the Notice of Federal Tax Lien does not
affect the statutory lien provided by Internal Revenue Code section 6321; it simply relinquishes any lien
priority obtained by the Internal Revenue Service when the notice was filed.
You may present your copy of the withdrawal form to any
credit reporting agency, financial institution, or other creditor as you deem
appropriate.
If you have any questions, please call the person whose name
and phone number are shown above.
Sincerely yours,
Group Manager
Enclosures
Form 10916(c)
Letter 4026 (xx-2011)
Catalog Number 47462E
IRSIG SBSE-05-0312-029
Reissuance of Interim Guidance for Withdrawal of Notice of
Federal Tax Lien in Direct Debit Installment Agreement Situations
FULL TEXT:
March 13, 2012
Control Number: SBSE-05-0312-029
Expiration: December 31, 2012
IRM Impacted: 5.12.3
MEMORANDUM FOR DIRECTORS, COLLECTION AREA OPERATIONS
DIRECTOR, ADVISORY AND INSOLVENCY DIRECTOR, FILING AND PAYMENT COMPLIANCE (SB)
DIRECTOR, FILING AND PAYMENT COMPLIANCE (WI) DIRECTOR, CAMPUS COMPLIANCE
SERVICES (CINCINNATI)
FROM:
Scott D. Reisher /s/ Scott D. Reisher
Director, Collection Policy
SUBJECT:
Reissuance of Interim Guidance for Withdrawal of Notice of
Federal Tax Lien in Direct Debit Installment Agreement Situations
This is a reissuance of the Interim Guidance signed April 7,
2011, under control number SBSE-05-0411-036. The purpose of the Interim
Guidance is to provide instruction for processing requests for withdrawal of
notices of federal tax lien when the taxpayers are in an established Direct
Debit Installment Agreement (DDIA). Internal Revenue Manual (IRM) 5.12.3 ,
Certificates Relating to Liens, will be revised to include the information in
this memorandum. Please ensure that this information is distributed to all
affected employees in your organization.
Internal Revenue Code (IRC)
section 6323(j) provides that the Internal Revenue Service (IRS) may
(but is not required to) withdraw a Notice of Federal Tax Lien (NFTL) if it is
determined that certain criteria are met, including if the taxpayer has entered
into an installment agreement ( section 6323(j)(1)(B)). Effective immediately,
we are expanding current policy to allow a withdrawal under section 6323(j)(1)(B) when the taxpayer has
entered into a DDIA (subject to the conditions specified below).
This Interim Guidance memorandum sets forth the procedures
for this type of expanded withdrawal based on the current delegation orders.
Additional guidance will be provided as revisions to the delegation orders are
implemented.
The guidance contained herein regarding conditions for
withdrawal is specific to DDIAsituations. Conditions for other types of
withdrawals remain unchanged. Taxpayers may apply for a withdrawal under any
provision of IRC 6323(j), including
6323(j)(1)(B), and, except as otherwise described in this memorandum, all
procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for
withdrawal remain in effect.
Procedures
The following types of taxpayers qualify for withdrawal of
the NFTL under this DDIA provision:
Individual Master File (IMF);
Business Master File (BMF) (income tax only); or
BMF out of business (any type of tax).
Generally, a request for withdrawal under this provision
will be approved if all of the following conditions are met:
The aggregate unpaid balance of assessments is $25,000 or
less;
Note: The unpaid balance of assessments includes tax,
assessed penalty and interest, and all other assessments on the tax modules. It
does not include accrued (i.e., unassessed) penalty and interest.
If pre-assessed taxes are included, the pre-assessed
liability (including tax, penalty, and interest up to the date of expected
assessment) plus unpaid balance of other assessments must be $25,000 or less;
The total tax liability will be fully paid in 60 months, or
the agreement will be fully paid prior to the Collection Statute Expiration
Date (CSED), whichever comes first (Use Integrated Data Retrieval System (IDRS)
Command Code (CC) ICOMP);
The taxpayer requests the withdrawal in writing;
Note: Form 12277, Application for Withdrawal of Filed Notice
of Federal Tax Lien, is the preferred format for the taxpayer's request;
however, any written request that provides sufficient information may be used
for processing (see IRM 5.12.3.32 ).
The taxpayer is in compliance with other filing and payment
requirements;
The taxpayer is under a DDIA;
At least three consecutive electronic payments (generally
received on a monthly basis) have been processed under the DDIA and there have
been no defaults in payment under this, or any previous, DDIA; and
The taxpayer did not previously have a withdrawal of lien
for any of the modules included in the DDIA (e.g. TC 583 dc 03 on module). This
excludes previous withdrawals for improper filing under IRC 6323(j)(1)(A) (e.g., TC 583 dc 02 on
module).
Requests for withdrawal from taxpayers in a DDIA will be processed
as follows:
1. Requests will be reviewed for the Collection field
employee assigned the taxpayer's case or, if the case is not assigned,
forwarded to Advisory for review.Note: The filing location of the NFTL
determines to which Advisory office the request should be referred. (See
Publication 4235)
2. The reviewing employee will control the receipt of the
request and document any actions relative to the review on the control system
applicable to the employee's function (e.g., Integrated Collection System
(ICS)).
3. The reviewing employee will ensure that the conditions
for DDIA withdrawal set forth above are met.
a. If the conditions are not met, the employee will issue a
letter to the taxpayer denying the request and informing the taxpayer of their
appeal rights under the Collection Appeal Program (CAP).
b. If conditions for withdrawal are met, the reviewing
employee will: prepare a memorandum outlining the case facts and recommending
the withdrawal; secure his/her manager's approval on the memorandum; and
forward the memorandum, withdrawal request, and other pertinent documents to
Advisory for approval.
4. Upon receipt, Advisory will open a Non-field Other
Investigation (NFOI) control on ICS, if not already done, and review the
withdrawal package. The extent of the review will depend on the function
submitting the package.
a. If the package is received from the Collection Field
function and was approved by a Group Manager, Advisory only needs to conduct a
cursory review.
b. If the package is received from any other function,
Advisory will complete a full review of the package and application to make the
withdrawal determination.Note : Requests for withdrawal received from Appeals
as the result of a timely Collection Due Process, Equivalent Hearing, or a
Collection Appeal Program case will be processed in accordance with IRM 5.1.9
Advisory only needs to confirm the accuracy of the Form 13794, Request for
Release or Withdrawal of Notice of Federal Tax Lien.
5. Upon concurrence of the withdrawal by Advisory
management, Advisory will:
a. Prepare and forward Form 13794 to Centralized Lien
Processing (CLP) or input the withdrawal directly into the Automated Lien
System (ALS); and
b. Prepare and forward Letter 4026, Withdrawal Cover Letter,
to CLP.Note : Requests and documents forwarded to CLP should be by secure
email.
6. CLP will print the Form 10916, Withdrawal of Filed Notice
of Federal Tax Lien, from ALS and then:
a. Send Part 1 to the applicable recording office with the
filing fee; and
b. Associate Part 2 with the corresponding Letter 4026 and
mail the withdrawal to the taxpayer.
7. Advisory will close its NFOI control on ICS after
transmitting the documents to CLP. Actions taken by CLP relative to the
withdrawal can be viewed on ALS.
Taxpayers making payments under any other type of
installment agreement are not eligible for consideration for withdrawal under
the conditions specified above unless they convert to a DDIA and otherwise meet
the conditions. Taxpayers are not precluded, however, from requesting a
withdrawal under any provision of the
IRC 6323(j).
If a taxpayer defaults on making payment under the DDIA
after the NFTL is withdrawn, a new notice of lien may be filed, if appropriate.
Note : The above revisions apply only to a taxpayer's
eligibility for withdrawal consideration. They do not impact the criteria for a
taxpayer's eligibility for a DDIA.
In addition to the above:
The method of distributing copies of other approved
withdrawal documents will be revised to be consistent with this memorandum.
Specifically, Advisory will forward Form 13794 to CLP or input the withdrawal
to ALS directly, and CLP will issue a copy of the withdrawal to the taxpayer
with the Withdrawal Cover Letter provided by Advisory.
Letter 4026 will be used as the cover letter for all regular
withdrawal requests (i.e., those done before the lien is released).
Except as otherwise described in this memorandum, all
procedures in IRM 5.12.3 and 5.12.6 for evaluating and processing requests for
withdrawal remain in effect.
If you have any questions, please contact me, or a member of
your staff may contact Theresa Miliote, Program Manager or Kyle Romick, Senior
Program Analyst.
cc: Chief, Appeals
IRSIG TAS-13.1-0310-003
Interim Guidance on Recommending the Non-filing of Notices
of Federal Tax Lien in Certain Situations
FULL TEXT:
March 31, 2010
Control No: TAS-13.1-0310-003
Expires: March 30, 2011
MEMORANDUM FOR TAXPAYER ADVOCATE SERVICE EMPLOYEES
FROM:
Nina E. Olson /s/
National Taxpayer Advocate
SUBJECT:
Interim Guidance on Recommending the Non-filing of Notices
of Federal Tax Lien in Certain Situations
This memorandum is part of a series that consolidates and
clarifies current guidance in different Internal Revenue Manual (IRM)
provisions and TAS training materials. 1 The purpose of this memorandum is to
help Case Advocates and Local Taxpayer Advocates think through, in the context
of the existing guidance, how they should advocate on behalf of taxpayers with
respect to the filing of a Notice of Federal Tax Lien (NFTL) in cases involving
installment agreements (IAs), Currently Not Collectible (CNC) status, or offers
in compromise (OICs). There are certain situations in which the IRM requires
automatic NFTL filingwithout considering individual taxpayer facts and circumstances
and without managerial review. 2 In these situations, TAS employees need to
investigate the case and apply the factors described in this memorandum to
determine whetherthe filing of an NFTL is appropriate. TAS employees should
advocate for the non-filing of an NFTL when it is appropriate based on the
taxpayer's facts and circumstances. TAS employees do not make the actual lien
determination.
Background
Section 3421 of the
IRS Restructuring and Reform Act of 1998 (RRA98) provides that, where appropriate,
a supervisor review the proposed lien filing, considering the amount due and
the value of the taxpayer's assets. 3
In addition, Internal Revenue Code (IRC) § 6323(j)(1) provides the IRS a discretionary
mechanism for withdrawing the NFTL when one of the followingcriteria is met:
(A) The IRS filed the NFTL prematurely or otherwise not in
accordance with procedures;
(B) The taxpayer entered into an installment agreement to
satisfy the liability (unless the IA provides otherwise);
(C) The withdrawal would facilitate collection; or
(D) The withdrawal is in the best interests of the taxpayer
(as determined by the National Taxpayer Advocate) and the United States. 4
In these situations, Case Advocates should advocate for the
non-filing of a lien by arguing that the IRS should not file an NFTL because it
would meet the criteria for withdrawal once filed.
When is a Lien Determination required?
IRM 5.19.1.5.5 describes the four (4) types of installment
agreements that TAS employees have the delegated authority to accept: (1)
streamlined (up to $25,000), (2) non-streamlined (up to $100,000), (3)
guaranteed (up to $10,000), and (4) in-business trust fund express (up to
$10,000). An NFTL determination is not required for installment agreement types
(1), (3), and (4), but a lien determination is required for non-streamlined
installment agreements (NSIAs). A lien determination is also required when
placing an account into CNC status perIRM 5.12.2.4.1(1) if the balance owed is
over $5,000. Similarly, IRM 5.8.4.9 requires a lien determination in OIC cases
where the unpaid balance of assessment is $5,000 or more and the offer is being
rejected or accepted with deferred payment terms.
Determining when to advocate for the non-filing of an NFTL
In situations where the taxpayer's individual facts and
circumstances meet the criteria in IRM 5.12.2.4.2(1)-(8) for not filing or
deferring an NFTL, or one of the IRC § 6323(j)(1) requirements for an NFTL
withdrawal, Case Advocates should advocate against the filing of an NFTL. 5
When making the decision to request that the operating
division refrain from filing an NFTL, you must carefully evaluate all of the
facts and circumstances including the following:
Compliance History. Has the taxpayer had prior balances due?
If so, how recently? Would the NFTL filing jeopardize the taxpayer's ability to
comply with the tax laws in the future? The fact that a taxpayer has never had
a delinquent tax account before or has not had a delinquent account in recent
years should weigh significantly in favor of refraining from filing an NFTL.
Reasons for noncompliance. Is the taxpayer's noncompliance
attributable to a one-time unusual or catastrophic event, such as a heart
attack, hurricane, or a loss of job? Are there extenuating circumstances that
may contribute to the noncompliance? The following situations are examples of
such extenuating circumstances: after a stroke, the taxpayer fell behind in
estimated tax payments, or after the loss of a job, the taxpayer incurred a ten
percent penalty for early withdrawal from an IRA. In such situations, where the
taxpayer has been historically compliant except for a one-time catastrophic
event, filing of an NFTL will harm the taxpayer's ability to repay his or her
tax liability and remain compliant in the future.
Hamper Collection. Will the filing of an NFTL hamper the
collection of tax? If not filing the NFTL will significantly impair the IRS's
ability to collect the tax, this factor should weigh in favor of filing an
NFTL.
Undue Harm to the Taxpayer that Reduces Collection
Potential. Consider whether the filing of the NFTL will harm the taxpayer's
financial viability, thus reducing collection potential, i.e., the filing
prevents the taxpayer from obtaining or retaining employment or obtaining the
financing necessary for a business taxpayer to remain in business. If the
filing of the NFTL unduly harms the taxpayer and reduces collection potential,
this factor should weigh in favor of refraining from filing an NFTL.
Payment before the Collection Statute Expiration Date
(CSED). Will the proposed Installment Agreement fully pay the taxpayer's
balances owed prior to the expiration of the CSED? If the taxpayer can pay in
installments before the CSED, this factor will weigh in support of a
determination not to file an NFTL.
Existence and Value of the Assets. Are there assets,
including real and personal property, to which the NFTL can attach? Is the
taxpayer likely to acquire assets in the future? If so, determine the net
equity in the assets. Research IRS databases and available third-party
information concerning the taxpayer's assets, income, and the value of the
equity in the assets. Where appropriate, request and review taxpayer financial
information, including Forms 433-A, Collection Information Statement for Wage
Earners and Self-Employed Individuals, or Forms 433-B, Collection Information
Statement for Businesses. If you have access, search assets on Accurint, a
web-based asset locator system. Seek ROTA assistance if necessary to assist you
with equity determination. If the NFTL will not attach to property with
significant value, or if the taxpayer needs the equity to cover an anticipated,
necessary expense, this factor will weigh in favor of a determination to
refrain from filing an NFTL.
In analyzing your case, consider all the factors and
determine whether the NFTL filing is appropriate. Remember that this is not a
complete list of factors, and that you should consider other relevant factors
depending on the facts of your case.
Note: If at any time you need assistance in determining
whether it is appropriate to request the non-filing of an NFTL or whether the
taxpayer owns assets, please contact a ROTA to discuss the individual facts and
circumstances of your case. ROTAs have access to Accurint.
Example 1
You have been assigned the case of Taxpayer A, who owes
$10,000 in income tax, penalty, and interest for 2008. The compliance history
shows that Taxpayer A has been compliant in recent years and any past
delinquencies were promptly resolved. A review of the taxpayer's Collection
Information Statement (CIS) shows that he can afford $150 per month. It will
take the taxpayer over 60 months to pay the full balance, but the debt will be
paid prior to the expiration of the CSED. The CIS also shows that Taxpayer A has
no assets except his home, which has a fair market value (FMV) of $350,000 and
a first mortgage of $347,000. Thus, there is no equity in the home. The
taxpayer has requested a non-streamlined installment agreement to fully pay the
tax debt; although Taxpayer A owes less than $25,000, the liability will not be
paid within 60 months.
In general, you should advocate for the non-filing of the
NFTL as this taxpayer has been compliant in the past, the account will be paid
prior to the expiration of the CSED, and the harm to the taxpayer would
outweigh the benefit to the government because the taxpayer has no equity to
which the lien could attach.
Example 2
You have been assigned the case of Taxpayer B. The facts are
the same as in example 1 above, but the taxpayer has equity of $200,000 in the
house, i.e., sufficient equity against which to borrow. However, the taxpayer
does not want to liquidate or borrow against the house and has requested a
non-streamlined IA to fully pay the liability; although Taxpayer B owes less
than $25,000, the agreement will not be paid within 60 months.
In these circumstances, the government's interests may
outweigh the harm to the taxpayer who refuses to borrow against the property to
pay the tax liability. Thus, you conclude based upon an evaluation of all of
the facts and circumstances that you cannot recommend that the IRS refrain from
filing an NFTL. You will prepare an OAR requesting that the OD make the lien
filing determination. The taxpayer will have a right to a CDP hearing if the
IRS files the NFTL.
Example 3
The facts are the same as in example 2, but the taxpayer has
a special-needs child and must utilize the equity in the house to provide for
ongoing medical and other care for the child. In these circumstances, you should
advocate that the IRS refrain from filing an NFTL.
Example 4
Taxpayer C, who is self-employed, owns an insurance business
with an unpaid combined income and employment tax liability of $62,500 for tax
years 2008 and 2009. The taxpayer filed Form 911 stating that he just received
a notice and demand for payment of the outstanding tax liabilities and is
worried about the IRS filing an NFTL. The taxpayer's financial information
shows a substantial decline in gross receipts and an increase in unpaid accounts
receivable. The taxpayer has requested that the IRS accept an offer in
compromise. If the IRS files the NFTL, the taxpayer will lose his employment
because the state insurance licensing board requires insurance agents to have a
clean credit history. You determine the OIC is acceptable according to the IRM
guidelines. You also determine that the NFTL will not be in the best interests
of the taxpayer and the United States because it will hamper collection and
future tax compliance if the taxpayer cannot retain his employment.
In these circumstances, you should advocate that the IRS
accept the OIC and that the IRS refrain from filing an NFTL. The filing of the
NFTL will hamper collection, prevent the taxpayer from maintaining employment
and staying in business, and jeopardize the taxpayer's ability to comply with
the tax laws in the future.
Sending an Operations Assistance Request (OAR)
If after weighing all facts and circumstances of your case,
you have determined that TAS needs to advocate for the non-filing of an NFTL,
elevate the case to your Local Taxpayer Advocate (LTA) and simultaneously
forward the OAR to the Operating Division (OD) requesting that the IA, OIC, or
CNC be accepted without filing an NFTL. In cases where you are accepting a
non-streamlined installment agreement based on delegated authority, 6 accept
the IA and simultaneously forward the OAR requesting the non-filing of an NFTL.
In all cases, the OAR should request an OD manager's review any determination
denying TAS' recommendation not to file the NFTL. If the OD does not agree with
your recommendation not to file the NFTL in any of these situations,
immediately notify your LTA to discuss the case with the OD manager. If the OD
manager disagrees with the non-filing of an NFTL, the LTA should promptly
consider issuing a Taxpayer Assistance Order (TAO).
When sending an OAR, request expedited handling. Including
the following language in the OAR will support your recommendation and clarify
the issue:Due to the above taxpayer's financial situation, we are recommending
[insert -the account be placed into CNC status / the offer in compromise be
accepted / acceptance of the IA]. Due to the amount of the liability, a Lien
Determination is required.
Based on a thorough review of the taxpayer's information
(including IRS and available third party information) concerning their assets,
income, and the value of the equity in the assets [insert specific facts and
circumstances regarding the taxpayer], TAS has concluded that [insert all that
applies: the NFTL will not attach to property / the NFTL will hamper collection
/ the harm to the taxpayer will outweigh the benefit to the government/ or the
NFTL filing will jeopardize the taxpayer's ability to comply with the tax laws
in the future]. Therefore, we are recommending that the IRS refrain from filing
an NFTL so long as the taxpayer remains compliant.
If you do not agree with this recommendation, please have
your managerimmediately contact the Local Taxpayer Advocate (Insert name and
phone #) to discuss further.
In cases where after considering the relevant factors, TAS
decides not to recommend that the OD refrain from the filing of the NFTL,
forward the OAR to the OD to request that the OD make the lien filing
determination.
Issuing a Taxpayer Assistance Order (TAO)
If the OD does not agree to refrain from filing the NFTL,
evaluate the reasons given in support of filing the NFTL. If you still
disagree, elevate the case to the LTA to consider issuing a TAO. 7 If the LTA
decides to issue a TAO, follow the procedures in IRM 13.1.20 , TAS Taxpayer
Assistance Order Process. The TAO should order the IRS to refrain from filing
the NFTL and must explain why, based on the law and the facts of the case, the
filing is not appropriate.
When preparing the TAO, you should include the following
language, where appropriate:
Based on a thorough review of the taxpayer's information
(including IRS and available third party information), the criteria for not
filing a lien found in IRM 5.12.2.4.2 have been met. [Discuss how the various
criteria listed in this IRM have been established in this case.] Therefore, the
NFTL should not be filed so long as the taxpayer remains compliant.
Please contact James Book, Technical Analysis and Guidance,
at (816) 291-9944, for further information.
1
See, e.g., TAS,
Interim Guidance on Handling Collection Cases where Economic Hardship is
Present but the Taxpayer has not Filed all Required Returns, Control No.
TAS-13.1-0110-001(Feb. 28, 2010).
2
For example, when
the account is placed in CNC status, the IRM requires NFTL filing for any
unpaid balance of $5,000 or more, or if the IRS is unable to locate or contact
the taxpayer, or the taxpayer is experiencing an economic hardship. IRM
5.12.2.4.1(1) (Oct. 30, 2009); IRM 5.19.4.5.2 (Apr. 26, 2006). The IRM requires
the filing of an NFTL for non-streamlined IA accounts of more than $5,000. IRM
5.19.1.5.5(19) (Dec. 4, 2009). Similarly, for example, an NFTL would normally
be filed with OICs on unpaid balances of $5,000 or more and the offer is being
rejected or accepted with deferred payment terms. IRM 5.8.4.9 (Sept. 23, 2008).
3
RRA 98, Title III,
§ 3421, Pub. L. No. 105-206, 112 Stat. 685, 758 (1998).
4
IRC § 6323(j); Treas. Reg. § 301.6323(j)-1.
5
Under IRM
5.12.2.4.2(8) a taxpayer may also submit a faxed request for non-filing of the
NFTL if the revenue officer has contacted the taxpayer by phone or in person.
Such a request may include the reasons why the taxpayer wishes the NFTL not to
be filed, which the RO should note in the case history.
6
Per Delegation
Order 13-2 (Rev. 1), TAS has the authority to accept installment agreements
under the procedures contained in IRM 5.19.1.5.4 (or successor provisions).
7
The LTA may also
consider pursuing an appeal under CAP. See IRM 5.19.4.5.2(12)(b) which provides
that “if a taxpayer expresses serious objections regarding the lien filing ...
treat it as a Collection Appeal Program (CAP) before filing the lien.”
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